3 Questions
What is the long run rate of depreciation of a currency relative to another nation?
The difference between the nominal money supply growth rates in each nation minus the difference between growth rates of real GDP.
What factors determine the long run rate of depreciation of a currency?
Real GDP growth rates
What is the relationship between relative PPP and the simple monetary model of exchange rates?
Relative PPP is a subset of the simple monetary model of exchange rates.
Test your knowledge on exchange rates and the factors that influence currency depreciation with this quiz. Discover the relationship between relative PPP and the simple monetary model, and find out what factors determine the long-term rate of currency depreciation. Choose the correct answer from multiple-choice options and improve your understanding of exchange rates.
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